Correlation Between Sam Chun and Settlebank

Can any of the company-specific risk be diversified away by investing in both Sam Chun and Settlebank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sam Chun and Settlebank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sam Chun Dang and Settlebank, you can compare the effects of market volatilities on Sam Chun and Settlebank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sam Chun with a short position of Settlebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Chun and Settlebank.

Diversification Opportunities for Sam Chun and Settlebank

0.08

Correlation Coefficient

Sam Chun  Settlebank

Significant diversification

The 3 months correlation between Sam and Settlebank is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sam Chun Dang and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank and Sam Chun is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sam Chun Dang are associated (or correlated) with Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of Sam Chun i.e., Sam Chun and Settlebank go up and down completely randomly.

Pair Corralation between Sam Chun and Settlebank

Assuming the 90 days trading horizon Sam Chun Dang is expected to generate 2.08 times more return on investment than Settlebank. However, Sam Chun is 2.08 times more volatile than Settlebank. It trades about 0.09 of its potential returns per unit of risk. Settlebank is currently generating about -0.09 per unit of risk. If you would invest  13,380,000  in Sam Chun Dang on October 20, 2024 and sell it today you would earn a total of  3,500,000  from holding Sam Chun Dang or generate 26.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Sam Chun Dang  vs.  Settlebank

Sam Chun Dang

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Chun Dang are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sam Chun sustained solid returns over the last few months and may actually be approaching a breakup point.

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sam Chun and Settlebank

The main advantage of trading using opposite Sam Chun and Settlebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Chun position performs unexpectedly, Settlebank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Settlebank will offset losses from the drop in Settlebank's long position.

The idea behind Sam Chun Dang and Settlebank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.